The Kraft Heinz Co is a food and beverage company. It manufactures and market food and beverage products, including condiments and sauces, cheese and dairy, meals, meat, refreshment beverages, and other grocery products.

In July 2015, Kraft merged with Heinz to create the third-largest food and beverage company in North America behind PepsiCo and Nestle and the fifth-largest player in the world. Beyond its namesake brands, the combined firm's portfolio includes Oscar Mayer, Planters, Ore-Ida, and Philadelphia. Outside of North America, the company's global reach includes a distribution network in Europe and emerging markets that drive around one fifth of its consolidated sales base, as its products are sold in more than 190 countries and territories around the world.

Guru Investment Theses on The Kraft Heinz Co

David Rolfe Comments on Kraft Heinz - Oct 12, 2018

We sold our remaining holdings in Kraft Heinz (NASDAQ:KHC) after reducing our position last year, primarily on the elongated cadence of continued acquisitions. Our thesis for the remaining position in Kraft Heinz was reliant on the Company’s ability and tolerance for a steady cadence of inorganic growth - not unlike what we have seen at several companies where 3G Capital has a controlling stake. We expect Kraft Heinz to be an expandable platform for global brands, where the Company can acquire chronically under-earning branded consumer portfolios and implement a profit-oriented culture to drive long-term growth and value creation. While the Company can still execute this approach, we think the timeline and opportunity cost of waiting for this execution has extended and risen, respectively. We think a difficult industry backdrop has contributed to management’s trepidation for executing a deal, as well as potential targets that are less willing to cede control. As consumer brands continue to see pressure from private label and receive more pushback from an increasingly consolidated distribution channel, we believe it is inevitable that brands become more amenable to acquisition by Kraft Heinz. However, until that timeline becomes clearer, we decided to liquidate our remaining position in Kraft Heinz and allocate the proceeds to businesses that have more visible growth.

David Rolfe Comments on Kraft Heinz - Jan 12, 2018

Kraft Heinz underperformed during the past quarter and throughout the year as tough conditions in the traditional branded food industry – primarily negative volume growth, as well as pricing pressure from retail customers intent on giving away their profits to chase market share – weighed on the company’s results. Furthermore, investors have been itching for the Company to execute another major acquisition, and this failed to materialize in 2017, although the Company did make an ultimately abandoned approach for Unilever early in the year. We have been impressed, during our ownership of Kraft Heinz, with management’s ability to cut costs and to improve margins at the businesses it has integrated, but, with over $1.5 billion of cost savings already behind us, and with volume growth nowhere to be seen, we believe we need to see a major acquisition to drive the stock meaningfully higher.

We believe the company remains active in its pursuit of acquisitions, and this would seem to be an ideal environment for buying, between still-low interest rates, relatively lower valuations across the Consumer Staples sector, and nearly limitless available liquidity between Kraft Heinz and its co-sponsors, 3G and Berkshire Hathaway. We believe acquisition integration and operational and financial improvement are core strengths of the organization, and we would be positively biased toward any acquisition. With all of this in mind, we did trim our position in the stock throughout the year, particularly as we saw the stock bouncing off of all-time highs while the fundamental performance of the company, in terms of volume/revenue/profit growth, was struggling. In the most recent quarter, we were relieved to see underlying organic performance improve somewhat, but we continue to believe the growth we require will only come from a continuing acquisition strategy, and we are monitoring this situation closely.

David Rolfe Comments on Kraft Heinz - Jan 16, 2017

Kraft Heinz (NASDAQ:KHC) is a rare example of a company that has issued sizable debt with the goal of increasing sales and earnings - particularly earnings, in the case of Kraft Heinz. The unique, hard-to-copy management style of 3G (entrepreneurial, zero-base budgeting), coupled with low-cost debt, has proven to be quite a powerful combination for driving higher profitability well beyond industry peers.

Top Ranked Articles about The Kraft Heinz Co

We sold our remaining holdings in Kraft Heinz (NASDAQ:KHC) after reducing our position last year, primarily on the elongated cadence of continued acquisitions. Our thesis for the remaining position in Kraft Heinz was reliant on the Company’s ability and tolerance for a steady cadence of inorganic growth - not unlike what we have seen at several companies where 3G Capital has a controlling stake. We expect Kraft Heinz to be an expandable platform for global brands, where the Company can acquire chronically under-earning branded consumer portfolios and implement a profit-oriented culture to drive long-term growth and value creation. While the Company can still execute this approach, we think the timeline and opportunity cost of waiting for this execution has extended and risen, respectively. We think a difficult industry backdrop has contributed to management’s trepidation for executing a deal, as well as potential targets that are less willing to cede control. As consumer brands continue to see pressure from private label and receive more pushback from an increasingly Read more...

Earlier this year, investors had the chance to buy three Warren Buffett-approved stocks at their lowest prices in a year: The Kraft Heinz Co. (NASDAQ:KHC), Procter & Gamble Co. (NYSE:PG) and Coca-Cola Co. (NYSE:KO). Price changes in Procter & Gamble and Coca-Cola stock have since moved them off the list, but four of his other holdings have since replaced them. Buffett stocks General Motors (NYSE:GM), Axalta Coating Systems Ltd. (NYSE:AXTA), Goldman Sachs Group Inc. (NYSE:GS) and Wells Fargo & Co. (NYSE:WFC) have all descended to their 52-week lows. Read more...

Investors have probably heard that past performance is no guarantee of future results. When buying stocks, this idea can work both ways. A stock that has rallied for several years may reverse course in the future. Conversely, a beaten-down stock could produce outsized returns, if it completes a successful turnaround. Read more...

Recent second quarter results from Kraft Heinz (NASDAQ:KHC) showed that the company continues to deliver minimal top-line growth. Revenue increased by 0.7% to $6.7 billion versus the same quarter of the previous year. Organic sales declined by 0.4%, although this was an improvement on the previous quarter’s 1.5% fall. Revenue in its core U.S. segment was down 1.9% against a 3.3% drop in the prior quarter, with Canada recording an 8% fall in sales. Read more...

Warren Buffett (Trades, Portfolio)’s Kraft Heinz Co. (NASDAQ:KHC) shot up more than 9% in late afternoon trading after it released stronger-than-expected results for the second quarter, showing credible signs of a turnaround after years of declining revenues. Read more...

In the past I've written about some of the difficulties associated with being a long-term investor running a concentrated portfolio. One of the struggles for this type of investor is that they lack a sufficient number of trials in their early years to determine if their process is effective (said differently, to find out if they are a good investor). In a great interview with AQR, Ed Thorp said the following: Read more...

Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC.
Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.